Capita is aware that the Home Office is pursuing discussions with another supplier with the intention of awarding them a contract to support the new DBS operations.

Capita is disappointed not to have been selected by the Home Office to support DBS. We believe we have built a strong partnership with the CRB, successfully delivering the disclosure service for over 10 years.

The company is in talks with the CRB to extend its current contract beyond its expiry date of 31 March 2013.

The news has sent Capita shares 13.5p lower to 762p, making it the biggest faller in the FTSE 100.

Analysts at Shore Capital believe the new supplier could be Tata. In a sell note on Capita, they estimated the contract brought in £60m of revenue per annum in recent years, generating an operating profit contribution of around £9m falling to around £4.5m from 2014.

They added that the run up to the next general election could result in a hiatus in new outsourcing work, especially given the political differences among the coalition members:

We believe that the UK's outsourcing environment may only have a short (18 months) rosy period before a rapid cooling emerges. Given its UK government related focus, Capita remains particularly exposed to this, in our view. We also continue to stress the competitive forces visible on current contract pipelines.